Retail media is steadily capturing a larger share of search advertising as artificial intelligence reshapes how consumers discover products and interact with brands. According to PwC, retail platforms are projected to generate nearly 45.5% of paid search revenue by 2029 — a 6.5% increase over 2024. EMarketer offers a similar outlook, forecasting that retail media will represent nearly one-third of all search spend by that same year.
At the same time, tools like ChatGPT, Perplexity, and Google’s Gemini are becoming increasingly integrated into daily life. For marketers, this signals a fundamental shift in how audiences are reached and engaged. Within retail media, these changes bring both significant opportunities and serious challenges.
AI is quickly becoming a trusted guide in consumer decision-making. Accenture’s Consumer Pulse Research finds that 36% of active AI users consider the technology a “good friend,” and nearly one in ten already view generative AI as their single most trusted source for buying decisions.
For active AI users, generative AI is now the second most trusted source of purchase recommendations, trailing behind only physical stores. This new reality positions AI not just as a search tool, but as a trusted guide shaping recommendations and a loyal companion creating personalized experiences.
The result: fewer traditional search clicks and a stronger pull toward retailer platforms, where purchase intent is higher and sales are easier to track.
Some of Google’s recent moves show how dramatically AI can reshape the digital ecosystem.
With the introduction of Google’s AI Overviews and AI Mode, referral traffic has fallen sharply. Data from Digital Content Next shows publisher referral traffic falling by up to 25%, while BrightEdge reports impressions rising 49% but clicks falling 30%.
For retailers, the impact of Google encroaching further into the discovery phase is already being felt. Traffic is increasingly concentrated on product detail pages (PDPs), while higher-funnel discovery journeys are disrupted. If site visits decline further as AI surfaces richer results directly in search, the value of retail media impressions — and the revenues they drive — could be at risk.
Google itself has acknowledged in a recent court filing that “the open web is already in rapid decline,” citing that non-open web display advertising is growing at the expense of the traditional open-web ecosystem. Several publishers and independent website owners are reporting that traffic has dropped following changes in search algorithms and the rise of AI tools, emphasizing just how immediate these shifts are.
Google remains the default gateway to the internet for most consumers, but challengers are circling. Perplexity’s failed $34.5 billion bid for Chrome and its new partnership with PayPal point to ambitions of creating a zero-click purchase engine — where transactions could bypass retailers entirely. Meanwhile, Google’s Gemini is positioned as Chrome’s default answer engine, reinforcing the risk that user journeys may increasingly start and finish within AI-powered environments.
Ultimately, who wins the battle for the browser and the default home page could determine just how much of your traffic is captured — or redirected elsewhere.
So where should retailers and marketers invest? Five priorities stand out:
At all costs. LLMs and AI are not magic — all models are only as strong as the data behind them. Retailers possess some of the most valuable first-party data, making it critical to protect. Amazon has already blocked ChatGPT from scraping its content, and Cloudflare now offers tools to help sites monetize scraping access. If you haven’t taken steps to protect your data yet, you should.
Don’t outsource your future. Too many companies rely on big tech to deliver AI functionality, handing over their data and personalization logic in the process. This places your most valuable asset in the hands of tech vendors — helping them fuel their own models and build up their value, not yours. Your data is your strategic asset. Invest in the teams and tools to turn it into an engine for growth.
Sponsored products remain the backbone of most retail media networks. But if user behaviour and expectations around search evolve with technology, this model could be threatened. Protect and divest from sponsored placements to preserve onsite revenue streams. (81% on sponsored products) https://iabeurope.eu/wp-content/uploads/IAB-Europe-Attitudes-to-Retail-Media-Report-July-2025.pdf
Reduce reliance on PPC & Google. Build your own network effect and competitive moats by creating offsite experiences and ecosystems that keep customers returning. Amazon recently experimented with switching off Google Shopping — making some very happy as their CPCs came down. But for those in the industry, this was likely Amazon stress testing if it could do without Google’s site traffic. Other retailers should explore similar strategies to reduce dependency & or build collaborative partnerships.
Even among heavy AI users, physical retail environments remain the most trusted channel. Retailers should play to their strengths rather than only protecting weaknesses — leaning into in-store experiences and, where possible, connecting those experiences to online touchpoints to help brands build loyalty and credibility that AI cannot replace.
The AI revolution is redefining three core dynamics:
No one knows exactly who will be friend or foe in the evolving AI ecosystem. But one thing is clear: retailers and brands must protect their data, reduce dependence on big tech, and position themselves as essential players in the increasingly AI-driven commerce journey.
The winners won’t just adapt to this autonomous future — they’ll actively shape it.
Interested in exploring how Kevel Audience can maximize your first-party data? Get in touch with us today.
